Wall Street ended a turbulent week on Friday with technology shares taking the heaviest losses. Unease over the borrowing behind the artificial intelligence build-out collided with stubborn inflation and a fresh jump in oil prices. The Nasdaq Composite fell 2.1% on the day and finished the week about 4.5% lower. It was the index’s worst weekly performance since late June and ended a month-long winning run.
A lopsided week beneath the surface
The S&P 500 dropped 1.1% on Friday and closed the week almost 2% lower. The Dow Jones Industrial Average slipped 0.4% on the day but still finished the week about 0.7% higher. By one count, that gap between a sliding Nasdaq and a rising Dow was the widest weekly divergence between the two since 2002. Investors were rotating out of high-growth technology names and into more defensive corners of the market.
Chipmakers lead the retreat
The Philadelphia Semiconductor Index fell 3.8% on Friday, its eighth straight daily decline and the longest losing run since 2008. For the week it lost 11.4%, its weakest showing since April 2025. Memory-chip makers were hit especially hard as traders fretted about competition from China. Micron, Advanced Micro Devices and Sandisk were among Friday’s decliners.
The damage was sharper in Asia. South Korea’s Kospi fell more than 14% over the week, its worst weekly drop since October 2008. SK Hynix shed roughly a quarter of its value.
CoreWeave puts AI financing under the microscope
At the centre of the anxiety is CoreWeave. The Nvidia-backed cloud-computing provider listed in 2025 and has funded its rapid expansion with more than $51 billion in debt. Its shares fell nearly 12% on Friday and lost about a quarter of their value over the week. Some of its bonds traded to record lows.
The cost of insuring against a default on its debt also climbed sharply. Reported levels implied roughly a 60% chance of default.
Gil Luria, head of technology research at D.A. Davidson, described such companies as the riskiest tier of the AI trade, the first to be sold when doubts about returns grow. Nvidia chief executive Jensen Huang voiced optimism about CoreWeave on Thursday, giving the shares a brief lift. The relief did not last.
Inflation and oil add pressure
The tech sell-off did not happen in isolation. US consumer prices rose 3.7% in September from a year earlier, above forecasts. Wholesale prices posted their biggest gain since 2022, reviving talk of further interest-rate increases from the Federal Reserve.
On Friday, Brent crude touched $110 a barrel for the first time since May, another inflation worry. Higher borrowing costs weigh most on heavily indebted companies and on growth stocks whose profits lie further in the future. That is why AI-linked names have been so exposed.
Not everyone sees a bust
Not every analyst reads the moves as the start of a deeper rout. Bank of America analysts led by Vivek Arya argued this week that the AI trade remains resilient, pointing to strong use of computing capacity. They also flagged risks:
- a possible credit wipeout at a heavily indebted cloud provider
- pressure from rising interest rates
- delays in power supply and permitting
Larger technology groups with deeper cash flows are widely seen as better placed to absorb financing costs than debt-laden specialists.
The longer picture
Despite the week’s losses, the major indices remain well above where they began the year. The S&P 500 is still up about 11% in 2026, and the Nasdaq Composite about 11.6%. A drop of this size after a long winning run is nonetheless a reminder of how much of the year’s gain rests on a single theme.
What to watch next
Investors will look to the Federal Reserve’s October 27–28 meeting, more earnings from technology and semiconductor companies, and the direction of oil prices. How credit markets treat debt-funded AI infrastructure in the coming weeks may matter as much as any earnings report.
